3 June 2005
Read the latest update on IIRSA policies and projects in South America. Learn what projects are underway, what companies are profiting and how the IDB is selling IIRSA to the Europeans.
June 3, 2005. Written by Lyra Spang.
También Disponible [español]
The IIRSA updates provide information about the initiative for the integration of the regional infrastructure of South America. They describe infrastructure projects and the activities of International Finance Institutions and Civil Society as they relate to IIRSA. The updates examine the role of multilateral banks in the IIRSA process and try to keep non-governmental organizations up to date with the latest news and developments related to IIRSA.
I. IIRSA Projects
The IIRSA Technical Committee creates a new Cluster of Projects in Ecuador: "Access to the Watersheds of the Morona-Marañón Amazon". 17th of April.
On the 17th of April in Quito Ecuador the Executive Technical Group (GTE in Spanish) of the Amazonian hub of IIRSA accepted a proposal from Ecuador to create a new group of projects within the hub, named "Acces to the Watersheds of the Morona- Marañón-Amazon". The GTE, represented by delegates from Brazil, Colombia, Ecuador and Perú, included 368.63 million dollars worth of projects in the new cluster. The projects were proposed by the government of Ecuador and included transportation, energy and telecommunications projects. This is the seventh official group to be part of the Amazonian Hub- all of which exist to improve access to various key watersheds and rivers in the region. Almost all of the rivers being developed are tributaries of the Amazon, which the architects of IIRSA want to use as a highway to connect the Andean countries with Brazil and the Atlantic. An article in El Mercurio says that the cluster will " …improve the logistics of national integration between the provinces of Guayas, Cañar, Azuay and Morona Santiago, as well as El Oro, Loja and Zamora Chinchipe, in order to consolidate the opportunity of international integration for the southern half of Ecuador and the Northeastern portion of Peru with the Brazilian state of Amazonas, through a riverine highway to Manaos." (Manaos or Manaus is a large Brazilian city located in the state of Amazonas on the Amazon River. It is a free trade zone and Brazil's most important trade center in the interior of the Amazon.) To read more about the cluster in Spanish go to: El Mercurio
The World Bank approves $200 Million Dollars in Guarantees to promote Public-Private Partnerships in Perú. 28th of April.
The World Bank has approved a 200 million dollar loan to strengthen the confidence of the Peruvian private sector through the provision of guarantees for public-private partnerships. The project is meant to promote collaboration between the government and private companies to implement infrastructure projects in the country (the majority of which are IIRSA projects). ProInversión, in coordination with the Peruvian government, has identified 15 infrastructure projects in different sectors that would benefit from a World Bank guarantee. The projects that are deemed eligible for a guarantee will be given in concession in accordance with the model of Build, Transfer and Operate (BTO). That is to say, during the life of the concession the company would construct the road (or other project), and would operate it for a time (while being paid by the government for doing so) and then would transfer the operation and maintenance to the state or to other companies selected by the state. Many IIRSA projects, especially road ways, are being built using the BTO model. Read more:
ProInversión will receive $7 Million US Dollars from the IDB to promote Infrastructure Transactions and Public-Private Partnerships in Peru.
Investment by the state of Peru in road maintenance has fallen almost 50% in the last 7 years. Instead of expanding public investment in its roadways, the Peruvian government wants to attract investment from the private sector and form Public-Private Partnerships between companies and the state. The privatization of Peru's roads forms part of a general government strategy that consists of giving concessions for transportation, the ports and the public enterprises of the state to the private sector in order to conform with the ideals of free trade and economic integration. PROINVERSION was created to promote the public resourses of the country, seek out foreign investment, facilitate the APPs and generally drive the privatization of the nation. The IDB's proposed loan would help its efforts in searching for the necessary private investment to finance the national and transnational infrastructure of Peru- concentrating on IIRSA projects located in the country. It would also finance the necessary studies for the formation of projects and concessions: feasibility, environmental, economic and other studies. "The Program of Support for Transactions" costs US $10 million, of which US $7 million will be financed by the IDB and US $3 million by ProInversión. The IDB expects to approve the loan in April of 2005. Read the loan document here.
ProInversión begins the Process of privatizing 9 Regional Airports in Perú.
The 22nd of July ProInversión will open the envelopes to determine which company will receive 9 regional airports that are being privatized. ProInversión has plans to privatize 19 airports in Perú, but the first package only includes tose in Tumbes, Piura, Lambayeque, La Libertad, Amazonas, Loreto, Ucayali, Huaraz and Cajamarca. The airports were chosen in collaboration with the local departmental governments who signed an agreement with ProInversión giving them permission to seek foreign investment to run local airports.
Almost all the airports are located in the north of the country, in key regions for the development of the Northern Branch group of projects of the Amazonian Hub of IIRSA. Piura is one of ten airports that are in the official list of IIRSA projects in Peru. The ten are all located in cities that are key points in the IIRSA initiative, where different transportation projects meet up. These include Piura, where a road system will link the city to the interior of the Amazon, as well as the airports of Puerto Maldonado and Llo-important port cities that represent the western limit of the Inter-Oceanic Highway-a key IIRSA project. The airports are just another aspect of a transnational plan-just another mode of transport that needs to be upgraded and privatized in accordance with the IIRSA plan, with ProInversion as the tool to effect these changes. Read more about the project in Spanish on the ProInversión website:
The Supervision of the Olmas Road Project has been conceded to a French-Peruvian Consortium. 26th of April.
A consortium of French and Peruvian companies has won the concession to supervise the road project Las Olmas. With the concession comes the responsibility to supervise the technical and economic aspects of the project and to ensure that the company in charge of construction and operation of the project complies with all the requirements of the concession. The consortium is composed of a French company (the leader of the group) Coyne et Bellier, and two Peruvian companies: Lahmeyer Agua y Energía S.A. and Alpha Consult S.A. Coyne et Bellier are internationally renowned, while Lahmeyer Agua y Energía is a subsidiary of a famous German company and Alpha Consult, according to ProInversión, is considered one of Peru's best consulting groups.
The project Las Olmas is a public-private road project located in the Northern Corridor of the Amazon Hub and connects the town of Olmos with Tarapoto. The Northern Branch of the Amazon Hub is another IIRSA project in the region that will link the Olmas road with Yurimaguas, thereby connecting Olmos with the network of roads and projects (the port of Yurimaguas, the network of Amazonian tributaries and roads, etc) that makes up the Northern Group of the Amazonian Hub. The regional government of Lambayeque, the Amazonian department of northern Perú, has signed an agreement with ProInversión to promote and concede the Olmos road and other associated projects. The Las Olmas road project is part of a large network of roads that are being granted to and built by private companies as part of IIRSA. The Andean Finance Corporation financed the Olmos road with a loan of $55 million dollars in fall 2004. Read ProInversión's press release (in Spanish).
See how the Olmos road fits into the regional network of projects.
The IDB will finance the "Multi-Modal" Group of the Northern Amazon, and the Consortium "Eje Vial Norte" wins the Concesión for this important IIRSA Program.
The program "Guarantees in the Northern Branch" (Amazonian Hub) supports a system of roads linking the northern coast of Perú with the Amazonian region of Brazil with a cost of around $200 million dollars.
The roads included in the program link the coastal cities of Piura and Paita with cities in the interior: Rioja, Moyabamba, Tarapoto and Yurimaguas. The objective of the project is to promote the economic integration between the port of Paita, the city of Piura and the riverine port of Yurimaguas through the physical integration of the region. The port of Yurimaguas is located on the Huallaga River, a tributary of the Amazon. When the system of roads is completed, the coastal cities of northern Peru will have access to the heart of the Amazon Basin and the Atlantic coast, and Brazil will have access to the Pacific. The Inter-American Development Bank will lend 75 million dollars to develop the project.
The Northern Branch program is located in the Amazonian Hub of IIRSA and is a public-private initiative. It forms part of the IDB's strategy to expand the participation of the private sector in the improvement of Peruvian transportation. ProInversión, under the guidance of the Ministry of Transport, Communications and Housing, was in charge of promoting the project to potential investors. The 5th of May the process of concession ended, when the consortium Eje Vial Norte won the bidding. The concession is for 20 years, with a period of execution of 4 years. " …It will be realized in two stages: the first, to complete during the first two years, includes rehabilitation and paving of the roads between Rioja-Tarapoto and Tarapoto-Yurimaguas. The second stage, to be completed during the second two years, includes the rehabilitation and construction on the roads between Paita-Piura, Piura-Olmos, and Olmos-Rioja." Commented the representative Fabiola Morales Castillo, author of law number 28174,which promoted the implementation of the project. She stated that the program " Will benefit 8 million people who live in the northern departments and in Northeastern Peru". The project is part of a series of connections between Brazil and Peru that form the heart of the IIRSA initiative in the region. Click here to read the IDB Loan document.
The IDB begins the Process of Approval for a Border Crossing Project in Peru.
The Inter-American Development Bank has begun the process of approval for another IIRSA project in Peru. The project Pasos de Frontera Peru (Border Crossings Peru) (CEBAF) is being considered for financing by the bank. It will cost 7,097,500 dollars. The bank is thinking of approving a loan of 5 million dollars. The project Pasos de Frontera Peru will improve the infrastructure, capacity and security of Peruvian border crossings with the intention of facilitating and expediting the passage of goods and people from one country to another. The project includes three crossings on the borders with Chile, Bolivia and Brazil. Read more about the project here:
The IDB proposes a Loan to decentralize the Peruvian Road Department
The Inter-American Development Bank has begun the process of discussion and approval for a loan destined to support a program of decentralization of the Peruvian road department. The project will cost 150 million dollars and the loan will be for $50 million dollars. It forms part of a broader program to decentralize the Peruvian government that has received loans from the IDB and the World Bank. The project will give all managerial responsibility to regional governments to maintain and rehabilitate the road systems in their departments, especially the secondary roads. Although this is not officially an IIRSA project, the decentralization of the road department of Peru will influence the process of integration in the country because the department of transport is already in charge of three road projects for the IIRSA initiative, and if it did not have to maintain the departmental road networks, it would have even more time and money to focus on the execution of key IIRSA projects such as the Inter-Oceanic Highway and the network of roads in the Northern Branch of the Amazonian Hub. Only the project outline is available as the loan is at the beginning of the approval process, read it here:
Bolivia and the IDB sign an Agreement in Okinawa, Japan over Plans to develop Northern Bolivia. 10th of April.
During the annual meetings of the Inter-American Development Bank in Okinawa, Japan, Mr. Mesa, president of Bolivia, and the minister of the House, Mr. Carlos Jemio, along with Mr. Enrique Iglesisas, president of the IDB, signed documents for a loan of 33.148 million dollars. The loan is for a program of improvement and rehabilitation of the road system in the north of Bolivia- known as the Northern Corridor. The Northern Corridor of Bolivia is one of the key programs in the IIRSA initiative, because it links Bolivia with Peru and Río Branco in Brazil, where the Inter-Oceanic Highway will connect Bolivia with the Atlantic and Pacific coasts, giving it access to both eastern and western markets. According to the 2000 Master Plan for Transportation in Bolivia, the funds will be used to improve the first tract of the road, located between Río Branco and La Paz. The program also is supposed to promote economic development in the region and its integration with the rest of the country, through its improved network of roads. Bolivia will receive free technical assistance thanks to an accord to " implement The Program of Execution of the External Pillar of the Medium Term Plan of Action for Effective Development (PRODEV in Spanish). PRODEV is part of a strategy to promote infrastructure projects that the IDB has established to ensure that countries without the technical capacity to perform the necessary social, environmental and feasibility studies can still develop large high impact projects (and continue to use the IDB's financing services).In addition, the IDB is using resources from Japan's Special Fund and the Fund for Special Operationis to finance a strategic environmental evaluation of the whole Northern Corridor, with the goal of identifying " Necessary priority investments to support the integration process". Read the press release here:
The World Bank begins the Approval Process for a Loan to Uruguay to improve its Roads and Ports.
The loan will finance the improvement of the country's road system and the expansion of the ports of Fray Bentos and Nuevo Palmira, an IIRSA project. The program is proposed in unofficial collaboration with the Inter-American Development Bank, which has already financed part of the national transport plan with a loan of 77 million US dollars in October of 2004. The remainder of the project will cost US 100 million dollars, of which 89.8 million will finance the rehabilitation and construction of road and port infrastructure and the rest (10% or 9.5 million) will support a program of institutional strengthening for the transportation department. The World Bank will help with a load of US 70 million dollars, and the government will finance the rest. In its loan documents the World Bank emphasizes that the private sector will have a strong role to play in the program, through the management of road concessions and a leadership position in the financing and management of the improved ports. With respect to the improvement of the Nuevo Palmira Port, a project that is part of group two of the MERCOSUR-Chile Hub in IIRSA, the program will help with " the elaboration of master plans to expand its commercial orientation and identify and remove bottlenecks." It will also help plan and finance the expansion of the terminal capacity, in collaboration with the private sector. Read the project document here:
II. IFI Policies and Consultations
The Inter-American Development Bank hosts three Consultations about the new Consultation, Compliance and Review Mechanism in Washington, México and Brazil.
The 3rd of February 2005 the Inter-American Development Bank made public the changes that it proposed to make to the Independent Investigation Mechanism or IIM. Civil Society demanded that they hold consultations on the draft mechanism like those that the bank organized for the new environmental policy. Thanks to pressure from NGOs and civil society, the IDB organized three consultations for the mechanism, now known as the Consultation, Compliance and Review Mechanism or CCRM. The first meeting was the 25th of April in Washington DC, the second was held in México on the 27th of April and the final meeting was held in Brasilia, Brazil on the 4th of May. They were very similar to the environmental policy consultations, except that this time the legal department was in charge of the process. Because of this they did not have the funds to pay the expenses of poor organizations that wished to attend the consultations. The civil society representatives reviewed the proposed document and presented their comments and suggestions to the bank officials. Local NGOs participated in the Washington meeting, presenting their points and comments. The meeting in México was not so successful-only 5 organizations attended and of those only one person had read the draft and prepared specific commentaries. In Brasilia CEDHA and approximately 19 other organizations participated with detailed comments and suggestions. Read the synopses of the meetings and their comments in Spanish as follows:
Update on The Inter-American Development Bank's Environmental Policy
After a successful and productive process of public consultation during which diverse civil society organizations expressed their preoccupations and presented their comments about the draft of the environmental policy, the Inter-American Development Bank closed the process to the public. At first the Bank informed the participants that it "had not contemplated" the necessity of circulating the final draft publicly before sending it to the Board for the final revision. The organizations that attended the consultations sent a letter to the president of the IDB and to officials in the environmental department, and met with representatives of the departments and executive directors to insist that the final draft to be presented to the Board be circulated to the public so that the participants in the consultation could see which of their suggestions had been incorporated. Those present at the meetings included Victor Ricco of CEDHA in Argentina, Marcus Faro from Rede Brasil, Aarón Goldzimer of Environmental Defense, Eric Holt-Giménez from the Bank Information Center, Elizabeth Bast of Friends of the Earth USA, Seth Nickinson from InterAction and Barbara Bramble from the National Wildlife Foundation. The interviewed directors and the vice-president of the Bank expressed their support of the demand to make public the final draft. The civil society groups plan to organize another round of meetings after the presentation of the draft to the Board.
How will the New Environmental Policy influence IIRSA? ~ The Question of Harmonization.
There still exist many questions about the real impact of the IDB's new environmental policy in the regions where the bank operates. This is especially important with respect to programs like the Plan Pueblo Panamá and IIRSA, where different financial actors with different (or absent) social and environmental standards and safeguards invest together in large complex transnational infrastructure projects. Will these entities-such as CAF, Fonplata or the BCIE-have to harmonize their own policies with those of the IDB? Or will they adopt those of the IDB? Will the new compliance and revision mechanism (CCRM) function properly in the case of environmental or social claims?
Until now it appears that the answer to these questions is a tentative "no". As Mr. Hernández, Peruvian coordinator of IIRSA, stated "…the impacts will be managed by the sector (and government) that oversees the project." And although they have to comply with the laws of the country, there is no mention of having to comply with the regulations of the leader of the initiative- the IDB- if said organization is not directly financing the project. Apparently to provide guarantees for a project does not imply that the project has to conform to the policies of the bank that lent the money for the guarantee. Nor does the project have to comply with IDB policies if that bank gives a loan to another financial entity, such as the Andean Finance Corporation, so that it can directly fund a project for the IDB. The Inter-American Development Bank has lent a lot of money to CAF (whose environmental policy consists of a sole paragraph) and BNDES (the Brazilian government's development bank). These corporations finance huge infrastructure projects without having to adopt the policies and safeguards of the IDB. Mr. Bertus Meins, during his presentation to the government of Holland, explains that in IIRSA "Each bank analyzes the project in its own manner." At the same time, an IDB article says that the bank is promoting the adoption of uniform standards and safeguards of sustainability for IIRSA between its partners in the region. There is no mention of this on CAF's website, the IDB's most important partner in IIRSA. Although the initiative has a concrete transnational plan on how to effect a physical and economic integration, there are no uniform standards or policies, nor an integrated system to evaluate the projects and their environmental and social impacts.
The Andean Finance Corporation- a promoter of Sustainable Development?
The Andean Finance Corporation (CAF) declares in every one of its press releases, annual reports and oficial presentations that it is an " multilateral finance institution that supports the sustainable development of its member countries, as well as regional integration." But upon examining CAF's projects and policies, it appears that infrastructure (sustainable or not) is considered more important than sustainable development. CAF's website states that " The Andean Finance Corporation, in keeping with its role as a financial organism propelling Latin-American integration, has given the highest priority to the consolidation of this process through the development and implementation of a plan consisting of physical infrastructure and border integration."
CAF has an environmental policy that utilizes the country systems approach. The policy says " The projects financed by CAF will strictly adhere to the environmental legislation of the country where the project is executed." It does not explain how compliance would be determined with a transnational project, or what happens when a project that was financed and constructed in one country causes negative impacts in another country. The document does not resolve even one of the problems caused by financing a transnational initiative like IIRSA using different environmental and social standards for each country and region. The policy does not discuss the fact that many of the countries where CAF operates do not have adequate social policies or environmental regulations, nor do they have the institutional capacity to ensure compliance with their own laws. The Andean Finance Corporation has lent hundreds of millions of dollars to develop projects for the IIRSA initiative, many of which are transnational or have international environmental impacts, and yet they continue to operate with a social and environmental policy that consists of three short pages. CAF has also received hundreds of millions of dollars from European governments and the IDB, without having to improve its almost nonexistent social, environmental and indigenous policies and safeguards. Private banks such as JP Morgan have more comprehensive environmental policies than the Andean Finance Corporation, a multilateral development bank with 17 member countries. To read the Andean Finance Corporation's social and environmental policy click here:
III. Civil Society Activities
The Bank Information Center launches a Program about IIRSA
The Latin American Program (LAC) of the Bank Information Center has received funds to launch a transnational project about the IIRSA initiative in the Andean Amazon. The program is called " Building Informed Civic Engagement for Conservation in the Andes-Amazon" (BICECA).
The objective of the project is to promote an informed and effective participation for the defense and conservation of the environment through a network of local, regional and international initiatives. The BICECA project tries to (i) augment knowledge and improve access to information about the projects and policies of the financial institutions that affect the Andean and Amazonian regions (especially with regards to IIRSA); (ii) strengthen the knowledge and the analytical base with respect to the multiple ecological and social impacts of these operations; (iii) facilitate the development of policies to influence the design and implementation of problematic investments made by the International Financial Institutions (IFIs).
The Latin America Program is also making a matrix of all the IIRSA projects (financed and un-financed) that will be eventually made available on the internet. In the United States outreach and educational activities around the regional and global impacts of IIRSA are also planned. For more information about BICECA write to Eric Holt-Giménez at eholtgim@bicusa.org or visit our program page: BIC's Latin America Program Page.
The Civil Labor Association of Peru Interviews the Technical Secretary of IIRSA in Peru. 12th of May.
The 12th of May representatives from the Civil Labor Association interviewed Mr. Luis Hernández O., Technical Secretary of Multi-sector Coordination of IIRSA in Peru. They asked him about the dates of various meetings and national workshops being planned by IIRSA's regional coordinators and technical committees, and they asked him the following questions:
- What does IIRSA consist of? What kind of projects does it include?
- What is the role of the IDB in IIRSA?
- What kind of social and/or environmental impacts do you believe the IIRSA projects will have?
- Will Camisea be part of IIRSA?
- Are there international environmental policies or regulations that the IIRSA projects will have to follow?Because in terms of the transportation sector the environmental regulations of Peru are minimal.
- Are the populations in the areas to be impacted by IIRSA projects prepared for them?
- How do you believe the issue of transparency in IIRSA could be improved?
- Are consultations with citizens and civil society organizations being organized?
Mr. Hernández responded saying that:
- IIRSA is not a bureaucratic entity, and does not design the projects-the road projects in Peru already existed; IIRSA is only integrating them with roads in other countries. "What exists will be integrated, what does not exist will be created". He did not admit that IIRSA has a role in creating the new projects- instead Mr. Hernández stated that ProInversión was in charge of all Peruvian projects.
- The IDB is only a financial entity that provides a vision of how things should be done.
- (The projects) will produce environmental impacts because they cross diverse ecosystems and geographic areas, but the impacts will be managed by the sector (and the government) that implements the project. All the projects have to have EIAs performed and must comply with national laws and international standards. The social impacts will result in economic benefits for the areas where the roads pass, allowing people to insert themselves into trade and the economy. IIRSA will improve modes of communication, and in the long term will facilitate the commercial exchange of products- thereby having great social impacts. IIRSA is mainly a transportation project, but it also addresses issues of political and economic integration..."It can only be hoped that in 70 years Latin America is like the European Union today."
- Camisea is not part of IIRSA, because it began before IIRSA, it has no reason be be part of it.
- In his response to question number 5, Hernández reiterated that " The environmental impacts will be overseen and managed by the sector that implements the project, th